President-elect Obama’s cabinet appointments have drawn fire from the left, arguably the core of the electoral base that elected him to the highest office in the land last month.

The more recent “Security Team” appointments, Hillary Clinton to Secretary of State, Robert Gates retained as Secretary of Defense, and General James L. Jones as National Security Advisor, is touted as a Lincoln-like “Team of Rivals”.Although few are giving Doris Kearns Goodwin credit for the title of her book about Abraham Lincoln of the same name, on the same subject, most Liberals are fairly understanding of the reasons for these appointments.

Gates has been an improvement over his predecessor (whose name my hands refuse to type) in magnitude that might be measured in light years.He has taken up the cause of making military spending of our tax dollars more responsible, relevant, and effective.And, as will be discussed more below, reigning in the national budget is a topic near and dear to Mr. Obama’s heart.At the end of the day, it seems to be widely considered prudent to retain continuity in this office while we are at war.

Ms. Clinton was likely backed in the primaries and caucuses by nearly half of the liberals in question. She has obvious organizational skills, international networks, and is somewhere up the learning curve having served on the Senate Committee on Armed Services.The argument that Obama would put her in this office in order to silence her, as Nixon did to William Rogers, seems quite preposterous.Comparing Obama to Nixon is a very long reach, but the real bottom line is that, regardless of the differences that their primary battle may have emphasized, she and the President-elect likely have much common ground philosophically on foreign affairs, she was not entirely happy with her continuing junior role as a US Senator, and should make an outstanding representative in this post.

Jones is a very level headed and capable man, with combat experience in the field as a marine platoon and company commander with G Company, 2nd Battalion, 3rd Marines which fought in the Battle of Khe Sanh in Vietnam, among other engagements.He served in Bosnia also, and has earned the Defense Distinguished Service Medal, a Silver Star and a Bronze Star with V for valor.

General James L. Jones

The biggest critique the left has of Jones is that he was not outspoken in the press about his reservations, or outright dissent, about the Iraq War.Yet taking it to the press is not his style; he apparently let Rumsfeld and former Joint Chiefs Chairman Peter Pace know his views behind the scenes.

Don’t forget that high ranking military officers who break ranks to take their arguments to the press are sometimes (maybe often) characters like General Wesley Clark, who thought he could bluff Slobodan Milosevic in Kosovo, predicting a “neat, tidy, and bloodless outcome” (Bacevich 2008, p.150).The subsequent continuation of NATO bombing killed 500 civilians while Milosevic’s stepped up ethnic cleansing campaign, his way of calling Clark’s bluff, murdered untold ethnic Albanians and created a huge refugee problem.Soon after, Wesley was ushered into early retirement and subsequently hit the talk show circuit promoting Kosovo as a great victory, claiming that the methods applied there “provided the template for future operations” (Bacevich 2008, p.142).

As General George Patton rides by in a Jeep in the hills of Sicily:

Soldier 1: “There goes old blood and guts.”

Soldier 2: “Yeah…our blood…his guts…”

— From the movie Patton.

Soldiers like James L. Jones, who have been in combat, are much less likely to buy off on grandiose ideas of American military exceptionalism, such as Iraq, which was to take three months and will never be over.As sincere as George Bush’s condolences to the families of soldiers killed in Iraq appear on television, his actions tell otherwise.And he didn’t even have the guts to serve his country in the rear echelon.

The real controversy surrounds Obama’s choice of financial advisers.While strongly promoting a sizable Keynesian response to the present economic recession, the President-elect has nominated Tim Geithner to be his treasury secretary, Larry Summers as director of his National Economic Council, Peter Orszag as director of the Office of Management and Budget (OMB), Christina Romer as director of the Council of Economic Advisors, and Paul Volker to chair the new Economic Recovery Advisory Board.Geithner and Summers are protégés of Robert Rubin, Bill Clinton’s second Treasury Secretary, who has been a senior executive at troubled Citicorp.

As much as these nominations have reassured Wall Street and many conservatives, The Economist notes that “Mr. Obama’s backers, in fact, can with some justification feel betrayed by the presence of so many figures from the Clinton regime…”Here’s what Noam Chomsky thinks:

Paul Krugman and others think there is a noticeable absence of Keynesian economists on the financial team.JamesGalbraith, Larry Mishel, Dean Baker, and Jared Bernstein are among those that progressives would like to see in the new administration.While I am not one who generally favors pandering Wall Street, the circumstances presently faced by our new leader seem to justify the hiring of highly qualified individuals who won’t rock the boat like appointment of the Keynesians noted above might.Even Krugman says:

there have been some complaints from movement progressives about the centrism/orthodoxy of Obama’s economics appointments. To some extent this was unavoidable, I think: someone like the Treasury secretary has to be an experienced hand who can deal with Wall Street, and I haven’t heard anyone proposing particular individuals with clearer progressive credentials to hold that position.

Geithner’s only real drawback, it seems, is his relationship to his mentor, Lawrence Summers, who made controversial statements regarding women, affirmative action, and Cornel West, while president of Harvard University.He also protected Andrei Shleifer from receiving a more just punishment for his actions in Russia, ultimately resulting in his resignation at Harvard.I wonder if, in fact, the controversy about Obama finance team appointments doesn’t stem more from Summer’s ill conceived and unwarranted statements and actions as Harvard president than from an objective assessment of the skills of this team.Had he brought in someone other than Summers, Obama may have spared himself much of the disenchantment voiced by his core supporters. Charles Ogletree, a law professor at Harvard gets it right in the December 6, 2008 NY Times:

Barack thinks with his mind open … Larry thinks with his mouth open.

While many wish to focus on Paul Volker’s history of bloodbath fiscal policy, listen to what he said last winter when he publicly backed Obama (from the NY Times);

“After 30 years in government, serving under five Presidents of both parties and chairing two non-partisan commissions on the Public Service, I have been reluctant to engage in political campaigns. The time has come to overcome that reluctance,” Volcker, a Democrat, said in a statement today. “However, it is not the current turmoil in markets or the economic uncertainties that have impelled my decision. Rather, it is the breadth and depth of challenges that face our nation at home and abroad. Those challenges demand a new leadership and a fresh approach.”

He concluded: “It is only Barack Obama, in his person, in his ideas, in his ability to understand and to articulate both our needs and our hopes that provide the potential for strong and fresh leadership. That leadership must begin here in America but it can also restore needed confidence in our vision, our strength, and our purposes right around the world.”

At the end of the day, Obama has put together a strong group of advisors who should be expecting to execute his ambitious economic stimulus plan, assuming Congress cooperates.The talent assembled is in stark contrast to the economic and financial advisors involved in the present administration, which might be described as economics by Braille (or cronyism).

Peter Orszag: nominated by President-elect, Obama as Director of the OMB

In fact, one of the greatest contrasts with the Bush administration promises to be the direction of the OMB under Peter Orszag.From an unknown source:

As director of the Congressional office since January 2007, Mr. Orszag has an up-to-the-minute familiarity with current budget issues. He has focused particularly on health policy, since cost increases for Medicare, Medicaid and other programs are projected to contribute to unsustainable budget deficits in coming years. Such expertise could help Mr. Obama, who has promised to expand health-care insurance to more Americans while containing costs.

Mr. Orszag served as an economic adviser to President Bill Clinton, and before that to Mr. Clinton’s Council of Economic Advisers. After leaving the White House, he formed an economic consulting company, and then became a senior fellow for economic studies at the Brookings Institution, a center-left research organization in Washington. There, he directed the Hamilton Project, which enlists scholars to propose solutions for problems with big fiscal and societal costs, and the Retirement Security Project, which promotes public and private incentives to help improve retirees’ income prospects.

Mr. Obama intends to fund some of his programs out of budget savings and notes that Mr. Orszag “doesn’t need a map to tell him where the bodies are buried in the federal budget.”The direction of OMB under the new administration promises to be one of the most positive changes.Along with Obama’s long standing attitude (and accomplishment) of fiscal efficiency and effectiveness, his choice of director, one with a solid background in the field and intimate knowledge of the federal budget, offers a glaring contrast to the four directors appointed during the Bush administration.The Economist notes that all four were trained as lawyers; “one was a pharmaceuticals executive, one did government relations for an investment bank, and two were congressmen.”

This, of course, is an area with a long history of strong rhetoric on the campaign trail followed by little administrative progress.But, for the many reasons noted above, I think Obama and his team will have a significant impact in tightening the budget.All taxpayers stand to benefit if Obama, who said, “We can’t sustain a system that bleeds billions of taxpayer dollars on programs that have outlived their usefulness or exist solely because of the power of politicians, lobbyists or interest groups” and his team can make an impact in this area.Getting more bang for our taxpayer buck could not begin at a better time than now.

With the US and world economies crumbling all around us, many voters have focused on the presidential candidate’s past and proposed economic policies.And while fixing the credit crisis is paramount, I think it is appropriate on the eve of election Tuesday to revisit the severely failed foreign policy of the United States of America in recent times.

Common knowledge has it that McCain’s strong hand is foreign policy and national security.But is this really true?Does the fact that John McCain is a veteran make us any safer?

I would argue, and always have, that the pre-emptive war in Iraq has made us all less safe than we were before it was launched.John McCain was the biggest cheerleader in congress for the invasion of Iraq; indeed, he promoted the entire Bush Doctrine of pre-emptive war.Use the military might of the US to progressively dominate the middle east, then move on to the rest of the world and clean it up, control it:

Whenever they’s a fight so hungry people can eat, I’ll be there. Whenever they’s a cop beatin’ up a guy, I’ll be there . . . . I’ll be in the way guys yell when they’re mad an’-I’ll be in the way kids laugh when they’re hungry an’ they know supper’s ready. An’ when our folks eat the stuff they raise an’ live in the houses they build-why, I’ll be there.– John Steinbeck, The Grapes of Wrath

This is certainly a noble concept, with its roots in Woodrow Wilson’s concept of American leadership in the world, but with a decidedly more military means of accomplishing high minded objectives.The problems with such a strategy are many.

First and foremost, many within and without the United States are convinced that these lofty goals are a thin veneer that covers the protection and promotion of US corporate interests.And our track record supports this contention.If we cared so much about human rights, why would we back Ferdinand Marcos in the Philippines, or the Somozas in Nicaragua?Clearly we were not so concerned that cops were beatin’ up guys, that children were starving, and that people were not free to speak.Our past is scattered with many more examples of US support for tyrannical and genocidal governments; and official justification has never quite satisfied many citizens of the world.

Iraq itself is a good example of how thin this veneer is.At first it was justified as a necessity to stop Saddam Hussein from developing WMD.When no such weapons could be found, the war was justified as a corner stone of the war on terror; we were “drawing the terrorists to the battlefield”.While this may have been true to some limited degree, does anyone seriously believe that terrorists would show up and fight against superior force?This is the antithesis of terrorism.As T.E. Lawrence well knew, and taught the Arabs, the greatest advantage is in stealth and concealment.Terrorists are like cockroaches; they scatter when the lights come on.In truth, the most dangerous never come out in the light.

Could it be that our second Iraq War is really just a small twist on the Carter Doctrine?Just before Jimmy Carter told Americans that the answer to our energy crisis (we had burned through most of our domestic supply of oil by the 1970s) was to tighten our belts, turn down the thermostat, and develop alternative fuels, he put the world on notice that any threat to American sources of imported oil – at the time highly concentrated in the Middle East – would be considered a threat to our national security and responded to with force if deemed necessary by us.This has always been understood as a warning to third party states, but Bush simply interpreted it as a warning also to the suppliers of our oil, such as Iraq, Iran, and others in the immediate area.Saddam was a threat to our oil supply from this region and had been warned by Jimmy Carter, so we took him out.This would have been a simple and honest policy statement in support of the pursuant war.Of course it would have fueled arguments against killing for resources, which was apparently grounds for applying the thin veneer in the first place.

Some Americans really believe that we are there to promote freedom and democracy.I know some people who want very badly to believe their sons, daughters, and friends fought and died for a noble cause. A small number of our soldiers have given up on finding merit in this war and are beginning to speak out:

The second big problem with this war is that it is based on false – some say dumb, others stupid – assumptions about our military capabilities that were brought on by the display of precision bombing executed in the first Iraq War.Sure we were able to destroy most strategic targets with minimal civilian casualties, but occupation, as we have now discovered, is still bloody, gruesome, and unpredictable.

The statesman who yields to war fever is no longer the master of policy, but the slave of unforeseeable and uncontrollable events.– Winston Churchill

Carl von Clausewitz’s words from nearly two centuries ago still apply: “War is the realm of chance.No other human activity gives it more scope, no other has such incessant and varied dealings with this intruder.” Yet Bush, Cheney, and others thought they would make history with this war; change the way wars were fought, free the world, secure oil, whatever…Chris Rock is right on with his estimation of the war:

When they wanted to start this war I firmly believed that it would be another Vietnam.I ate my words the day Bush pronounced “mission accomplished”.Yet every day since, it has looked more like Vietnam.It is now the second longest war the US has ever fought, after Vietnam.The enemy has no jungle to hide in, but remains very difficult to identify.Many who fought in Vietnam believe that it was literally a race war.There are many accounts of firing on South Vietnamese allies by mistake, often passed off as “well they’re only gooks”.Most veterans of the Iraq War call all the people towel heads and worse.It is not difficult to believe that there has been much indiscriminate killing of innocent civilians.The most racist attitude being that of US Congresswoman, Michele Bachmann, who thinks we may need to initiate a nuclear strike against Iran, a country whose population is strongly pro-American, but languishes under the thumb of a brutal Islamic Theocracy.Sure, just kill them all.

Urban warfare tactics have improved somewhat, and we are gradually having some success through diplomatic efforts on the ground in various villages, where leaders who are tired of the bloodshed are identifying insurgents and locating their weapons caches for US soldiers.The surge has had some success, but all told the Iraq War has been an economic, strategic, and foreign policy disaster for the US.What Andrew Bacevich calls (in The Limits of Power) “the lowly IED” has proven more formidable in Iraq than high-tech US weaponry and well trained troops.

To summarize, our motives are at least dubious and our capabilities are not up to the task of conquering and occupying nations the size of Iraq. The Bush Doctrine is based on unrealistic assumptions about US military and administrative capabilities and Cheney’s hair-brained one percent test of a potential foe’s probability of becoming a danger to US interests.McCain swallowed this idiocy whole and helped get us into Iraq.He wants to talk about the minor success of “the surge” all day long to gloss over how stupid this war is and how misguided are the people who got us into it.Barack Obama argued from the start against this war.

The real question now facing voters is: Should our nation initiate pre-emptive war against states that might one day attack us?

The foreign policy of the United States of America has been ruled by the military industrial complex since before Eisenhower warned of it.Let’s hope Barack Obama and a Democratic Congress can make some real changes to our foreign policy, like getting the military-industrial interests out of the process.I feel ill every time I hear someone confide that this war is creating jobs and helping our economy; I’d rather die of hunger. What a shame it will be if the world’s hope for democracy and human rights were to go down as an obese, paranoid bully, reviled by all those we could have helped instead of bombed. In case you are worried that I am suggesting we redistribute wealth, yes, they are our neighbors, and we should help them. The path to democracy is through economic development not war. And democracies don’t fight each other.

Newt Gingrich has come out with a plan to solve our financial problems:

The only problem with this is that his remedy is tantamount to curing a problem caused by deregulation and lack of enforcement of accounting and other rules by increasing deregulation and suspending accounting rules.In effect, this would allow even the biggest risk takers, who manage what are now the most insolvent banks, more free reign to take more risk.Like a gambler in Vegas who has lost borrowed money, they will invariably make bigger bets in hopes of being made whole and avoiding reality.

The Wall Street Journal, on October 2, claimed that the bailout bill approved by the House and quickly signed into law by President Bush on Friday “…reaffirms the Securities and Exchange Commission’s existing authority to suspend ‘mark-to-market’ accounting.”, noting also that “The SEC and FASB stopped short of bowing to pressure for a complete suspension of fair-value accounting.”

The same article stated that “Banks and a diverse coalition of lawmakers scored a victory on the issue Tuesday, when the SEC and Financial Accounting Standards Board issued “clarification” to the mark-to-market accounting rules. The clarification allows executives to use their own financial models and judgment if no market exists or if assets are being sold only at fire-sale prices. FASB said it is preparing additional guidance for later this week.”, and quoted John McCain, in his knee-jerk anti-regulation fashion, as saying, “There is serious concern that these accounting rules are worsening the credit crunch, making it difficult for small businesses to stay afloat and squeezing family budgets.”

Such language exhibits a misunderstanding of the applicable accounting rules and the bail out bill’s approach to fair-value accounting.Possibly worse, McCain’s statement seems to blame the credit crises on accounting rules rather than the lack of oversight and enforcement of existing rules, which are the true culprits.Maybe those who claim McCain is not conservative enough have a point; fair-value accounting is based on the principle of conservatism in accounting.This principle cautions against over valuing assets and revenue, and against undervaluing expenses and liabilities in financial reports.

Applicable accounting rules are not making the situation worse, only doing what they are supposed to do; establish a conservative valuation of a company’s assets and therefore, equity, or shareholder value, so that investors can make an informed decision about buying and selling.The pertinent fact here is that the market has failed to do its job, which is to establish a market value for these assets.There is no market for these assets due to their very poor and uncertain quality.

I did not read the entire 451 page bill to find any and all reference to “mark-to-market” rules.However, HR 1424, Division A – Emergency Economic Stabilization, Section 133, entitled “Study on Mark-to-Market Accounting”, found on page 89 (lines 10 through 24) and page 90 (lines 1 through 14) requires that the SEC study the effects of mark-to-market rules (specifically those contained in Statement of Financial Accounting Standards, or SFAS, 157) on financial institutions’ balance sheets, bank failures, and the impact of these accounting standards on the quality of financial information available to investors.The study is to assess the possibility of modifying the rules or applying alternate rules and report back to Congress within ninety days.

The following video contains a concise lesson in how bank accounting is affected by MBSs, but doesn’t acknowledge that mark-to-model is part of GAAP (Generally Accepted Accounting Principles; the rules that dictate how financial reporting must be done) when mark-to-market is unavailable:

SFAS 157 is not the only source of direction as to the valuation of assets such as mortgage-backed securities (MBS).SFAS 159 and SFAS 115 also apply depending on the particular nature of the MBS in question.Krumwiede, Scadding, and Stevens present a good overview of these rules and their specific applicability to MBSs in an article titled “Mortgage-Backed Securities and Fair-Value Accounting” published by the New York State Society of CPAs in May 2008.

SFAS 115, which has been around since May of 1993, requires that, whether classified as held-for-sale, or held-to-maturity, securities that have “other-than-temporary” impairment in value must be written down to their market, or fair, value.SFAS 115 explains:

“For example,if it is probable that the investor will be unable to collect all amounts due according to the contractual terms of a debt security not impaired at acquisition, an other-than-temporary impairment shall be considered to have occurred.”

In other words, interest rates change in cycles and can change the value at which a security trades, but this can be considered temporary if the mortgagor is expected to pay under the terms of the mortgage.Clearly the present MBS situation is other-than-temporary, because the problem is one of widespread default on mortgages.To wit, the Mortgage Bankers Association’s latest National Delinquency Survey:

WASHINGTON, D.C. (September 5, 2008) — The delinquency rate for mortgage loans on one-to-four-unit residential properties stood at 6.41 percent of all loans outstanding at the end of the second quarter of 2008, up six basis points from the first quarter of 2008, and up 129 basis points from one year ago on a seasonally adjusted basis, according to the Mortgage Bankers Association’s (MBA) National Delinquency Survey.

The delinquency rate includes loans that are at least one payment past due but does not include loans somewhere in the process of foreclosure. The percentage of loans in the foreclosure process at the end of the second quarter was 2.75 percent, an increase of 28 basis points from the first quarter of 2008 and 135 basis points from one year ago.

The percentage of loans on which foreclosure actions were started during the second quarter was 1.08 percent, up 7 basis points from last quarter and up 49 basis points from one year ago on a non-seasonally adjusted basis.

The seasonally adjusted total delinquency rate continues to be the highest recorded in the MBA survey. The increase in the overall delinquency rate was driven by increases in the number of loans 90 or more days past due, primarily in California and Florida. The 30 day delinquency percentage remains below levels seen as recently as 2002.

Once again this quarter, the rate of foreclosure startsand the percentage of loans in the process of foreclosure set new records.

Because of the high rate of mortgage foreclosures and delinquencies, and the falling value of the underlying collateral – homes – there is almost no market for MBSs, or the companies upon whose balance sheets these MBS portfolios lie. Merrill Lynch sold a large portfolio in July 2008 to an affiliate of Lone Star Funds (the secretive company run by John Grayken, former adviser to Robert Bass).The portfolio had a gross value of $30.6 billion, but was only being carried on the books of Merrill Lynch at $11.1 billion.To complicate matters, Merrill Lynch financed 75% of the $6.7 billion sale for Lone Star with recourse only to assets of the entity (Lone Star’s affiliate, a private entity, which does not release information to the public) purchasing the portfolio, and must buy the MBSs back if their value drops too far (details on how far were not mentioned in several articles).

This Merrill Lynch sale is one of the only recent sales of MBSs to occur, unless you count sales of entire companies, which leaves many asset and liability variables that must be taken into account to arrive at a value for the MBS portfolio.Clearly, there is not an active market for mortgage backed securities.

In anticipation of such a situation, which is not unprecedented, except in magnitude, SEC regulations and Generally Accepted Accounting Principles (GAAP) – including SFASs and other FASB clarifications – contain provisions that allow for valuing securities by other means when there are not active markets for them.Although SFAS 115 has been in existence for over a decade, SFAS 157 was written in 2006 to clarify contradictions between SFAS 115 and other FASB rules.

Thus, the generally accepted requirement to mark to market is not new and is not, as yet, subject to “suspension”.In fact, suspension of such rules makes no sense in light of investors’ need for information with which to make decisions about investing.The important question that begs an answer is; What is the market value of these MBSs?And GAAP, even as it existed before SFAS 157, has answers.It requires that when a market exists it must be used, but if one does not exist, management and accountants must use their judgment to conservatively value securities, such as MBSs.

As with any estimation of asset value, there are three approaches; cost, income, and market.Although the best estimate, and favored by GAAP and the SEC for securities valuation, the market, as discussed above, is not available or accurate (i.e. most of the securities are not worth zero).Cost is an approach used in appraising homes and other fixed assets under the theory that the cost of building a similar home at today’s prices would approximate today’s value.It seems obvious, especially in light of the Merrill Lynch example that original cost seems to have little or no relation to the present value of MBSs.

This leaves the income approach, which assesses the timing, amount, and certainty of cash flows earned by the security in order to arrive at a reasonable, discounted value.Thus, companies holding MBSs will need to dig into their portfolios and determine a reasonable value of them based on the note terms (including any substantial rate adjustments), the present and likely future default and foreclosure rates, and the probability of these predictions to arrive at a fair value that should be scrutinized by their CPAs, the SEC, and their investors.

Such a valuation methodology is similar to what the US Secretary of the Treasury will need to employ to administer the Troubled Asset Relief Program (TARP) prudently on behalf of tax payers, who are putting up to $700 billion at risk.One might hope that the government would lead by establishing some guidelines, or even requirements, restricting the use of this highly subjective method of valuing MBSs.TARP should identify the most important factors that determine the value of MBSs, such as the type of MBS, their specific terms, interest rates, and historical and predicted default rates.It should then, based on its experience in drilling down through MBS portfolios, set limits (in terms of minimums and maximums) as to the parameters that can be used for each component of valuation.

Sound like a more active form of regulation?It is, but to allow management to haggle over valuation and methodology with their accountants and then eventually the SEC will drag the process out over too long a time and likely allow unrealistically high valuations to persist.As noted by The Economist, “(mark-to-market) rules are deeply unpopular with many firms that have suffered losses and impaired capital positions.They would prefer to recognise losses in the traditional way – that is, slowly and when it suits them.”

The result of TARP taking charge of this process would be to place more realistic valuations on MBSs, but would also avoid writing them down to zero, which is probably not realistic for most portfolios.Normally, the metrics get increasingly accurate with experience.Such a process will not save those institutions which, by the measures developed, are shown to be insolvent, but will provide a more accurate valuation of corporate capital than exists now, which is what America needs.Actual suspension of mark-to-market rules would be a blatant bail out of the companies that took the most ill conceived and unwarranted risks with their capital, and I think most agree that these are ones that need to be allowed to fail.

In conclusion, mark-to-market rules do not need to be suspended, only enforced with more diligent oversight.Arguably, had they been more consistently and diligently enforced along the way this crises would have come to a head much sooner, avoiding some part of the fallout.The following documentary was made as an indictment of John McCain’s judgment, but also serves as a good indicator of what a bank will do when allowed to avoid or delay its day of reckoning by two years:

Incidentally, its presentation is professional and the truth of its claims is corroborated by the Truth Squad at CNN in the following video:

The Federal Reserve has published quantitative studies that indicate bad loans surround bad lenders and lending practices. Supervision of banks predates the Securities Acts, and over the years, a substantial body of data and research has supported the need to regulate banks, and to restrict or outlaw practices that put public deposits at undue risk. We are clearly at a juncture where some changes need to be made, and more deregulation is not the answer.

The carnage will continue until the banks are reigned in, conservatively valued, and prudently supervised.Even then it will take years to recover.The most difficult recovery will be that of the confidence of the public, which is so vital to healthy markets.

Matthew Wolf has been involved in accounting and finance for over twenty years.He spent several years directing audits of federal programs as part of Ronald Reagan’s “cut the fat” initiative, several years auditing banks and assessing the quality, risk, and value of their loan portfolios, and many more years making and monitoring (sometimes collecting) commercial loans.Through his banking experience, Mr. Wolf has had broad exposure to many industries, has served as the chief financial officer of a mid market telecommunications company , CEO of a small software company, and has an extensive background in private equity capital investments.He is now a private investor and a student of political science and literature.

It should be obvious by now that Senator John McCain’s version of “straight talk” is simply a frame for politics as usual.He has reversed course on so many issues that he often cannot remember just what his position is, or has been. Not only does this result in a plethora of conflicting statements from this would-be leader of the free world, but it highlights the serious detriment his age has on clear thinking, as is evident in the following clips:

Unintentional misstatements are certainly forgivable in a senior citizen, but is this someone we want running our nation?And several of the clips show an obvious intent to portray the situation in Iraq as much safer than it actually is by making blatant lies about the facts, then attempting to cover his tracks about as effectively as a toddler. How will he be able to communicate our foreign policy positions to the representatives of other nations if he can’t even keep his own personal policy commitments and the facts that surround them straight?

Now his tactics are becoming increasingly belligerent; attacking Obama with false and misleading claims that have even some republicans critical of such tactics.A recent article includes criticism from the likes of Senator Orrin Hatch of Utah, Don Sipple, a Republican advertising strategist, Matthew Dowd, chief strategist of Bush’s 2004 campaign, and factcheck.org, a non-partisan group.Among the many misrepresentations uncovered by factcheck.org “A McCain-Palin TV ad accuses Obama of being “disrespectful” of Palin, but it distorts quotes to make the case.” Even Karl Rove thinks McCain has “gone too far” in stretching the truth in his attacks of Obama.

When combined with Governor Palin’s misleading statements, especially regarding the Alaskan “bridge to nowhere”, and misunderstandings, such as the share of US oil that is produced in the State of Alaska, voters must wonder who they think they are fooling (other than themselves, of course).More importantly, it seems evident that McCain and Palin have no qualms about misrepresenting and misleading voters.One fact is clear; they are not even in the same league with Bush, Cheney, and Rove in such endeavours.

Now Obama is not entirely clean in this respect, but his misrepresentations regarding McCain and Palin are significantly less intense in both nature and frequency, such that they at least could appear to be inadvertent misunderstandings, though they may not be.In the news article previously mentioned, Don Sipple says, “Any campaign that is taking liberty with the truth and does it in a serial manner will end up paying for it in the end,” he said. “But it’s very unbecoming to a political figure like John McCain whose flag was planted long ago in ground that was about ‘straight talk’ and integrity.”

The concept of “recreating 68” seems at once a misunderstanding of what really happened at the Democratic National Convention in Chicago in 1968, and at the same time, an astute understanding of the reasons those events occurred.

In the seemingly bipolar world of the two-party United States of America, a true repeat of such rioting and anarchy in Denver, in 2008, would almost certainly revive the Republican backlash that took hold in 1968 and persisted, arguably, until George W. Bush’s ratings plummeted after the WMD were not found in Iraq and his excessive cronyism was exposed beyond doubt by the federal government’s inability to make any reasonable response to the hurricanes that battered Louisiana and Texas in 2004.

This loss of confidence – both at home and abroad – coupled with the subsequent economic dive has provided even the moderate McCain a steep uphill climb toward the presidency.Thus, with the independent vote of crucial importance to both parties, radicalism on either side only plays to the opponent’s hand.

In an interview with Colorado Public Radio’s “Colorado Matters”, Mark Cohen, one of the organizers of “Recreate 68”, a coalition of over one hundred different organization and protest groups, seems to get this, claiming that there is no “direct action” to be taken in Denver, because the convention is only a “show”, and therefore, only symbolic action is on the agenda.

But the name alone is subject to interpretation, subject to misunderstanding.Because it is not qualified to exclude the kind of violent confrontation experienced in Chicago, it may be a significant source of concern on the part of the Denver’s city government, as well as encourage some, who like so many at the political rallies in Berkeley, as characterized by Tom Wolfe in the Electric Kool-Aid Acid Test, are only looking for kicks, or are out to disrupt for non-political reasons. These two results could make “Recreate 68” a self fulfilling prophesy that its founders clearly did not intend. The Blog, Liberal Jackass Quotes, may not be off base to declare that “…If Cohen has any inclinations to “Re-Create 68” he is full of crap about any intention of having “innocent protesters.”

Larry Hales, representing Troops Out Now, shows a good understanding of why anyone might want to turn back the clock “…neither the Republicans nor the Democrats are fulfilling the needs of the American people.”When the interviewer asks why not show up in Minneapolis instead, as the Democrat platform seems closer to fulfilling American his perception of needs than the Republican, he responds that the Republican convention is important too.The underlying thrust of this coalition seems to be to communicate to the Democrats that they have a large, growing constituency which is not satisfied with them either.

In spite of the fact that these groups emphasize peaceful protest in both their words and on their web sites, they could be playing with fire.No organization has the ability to manage large numbers of people, in an uncertain environment, when they are actively demonstrating dissatisfaction with government.It is clear that the name they chose has increased mobilization on the part of the state, and may have incited counter movements to act.It is also clear that their real motives stand to lose substantial ground if things go wrong in Denver next week, not to mention the personal injury and physical damage that could result.This coalition’s choice of name has them playing with fire, let’s hope we don’t all get burnt.